The Multi-Functional Asset Protocol in the Solana Ecosystem: Is Metaplex an Underestimated "Invisible Tycoon"?

Introduction

In this round of the bull market cycle, Solana is undoubtedly one of the fastest-growing public chains. Whether it's the number of active addresses or fee income, Solana's market share in the L1 space is experiencing explosive growth:

• The share of active addresses increased from 3.48% to 56.83%, a year-on-year growth of 1533%.
• The share of fee income increased from 0.62% to 28.92%, a year-on-year growth of 4564%.

The meme token craze is the main driving force behind the rapid growth of various core metrics of Solana. In addition to Solana, DEXs like Raydium have also gained significant revenue due to active meme trading, and their token prices have recently reached new highs.

This article will focus on another project that benefits from the Solana asset issuance boom: Metaplex. We will analyze it from the following aspects:

1. The business positioning and business model of Metaplex
2. The business data and development status of Metaplex
3. The team background and financing situation of Metaplex
4. The current valuation level of Metaplex and investment opportunities

Business Positioning and Business Model of Metaplex

Metaplex is a digital asset creation, sales, and management system built on the Solana blockchain and supporting SVM. It provides developers, creators, and businesses with the tools and standards to build decentralized applications. The asset types supported by Metaplex include NFTs, fungible tokens, real-world assets, game assets, DePIN assets, and more.

Recently, Metaplex has also expanded its business into the data indexing and data availability service field within the Solana ecosystem. In the long term, Metaplex is expected to become one of the most important multi-domain infrastructure projects in the Solana ecosystem.

Metaplex product matrix

Metaplex, as a comprehensive asset issuance and management system, has a product matrix that includes:

• Core: The next generation NFT standard, utilizing "single account design" to reduce minting costs.
• Bubblegum: a program for creating and managing compressed NFTs ( cNFT ).
• Token Metadata: Attach additional data to assets on Solana.
• Candy Machine: NFT minting and issuance program
• MPL-Hybrid: Hybrid NFT storage solution
• Fusion: NFT Merging Function
• Hydra: Large-scale NFT minting solution
• Aura: decentralized indexing and data availability network ( in testing )

Metaplex's business model

Metaplex charges by providing on-chain asset-related services. Although the direct partners are other projects on Solana, most of the revenue comes from small projects or individual users that use these projects, including project parties creating tokens and individual users minting NFTs.

The main fee standards of Metaplex on Solana:

• Minting NFT: 0.0015 SOL/each
• Use Token Metadata: 0.01 SOL/transaction

The cost of using the Metaplex service once is very low for users, but due to the large user base, the accumulated revenue is considerable.

Metaplex's moat

The moat of Metaplex mainly comes from "high switching costs" and "setting standards":.

1. Users face high costs when switching to other protocols after deeply relying on Metaplex tools.

2. The asset format of Metaplex has become the de facto standard within the Solana ecosystem, and new projects will prioritize compatibility with Metaplex.

Thanks to these moats, there are few projects within the Solana ecosystem that can compete with Metaplex, ensuring its strong profitability.

Metaplex Business Data: High Product-Market Fit, Strong Growth in Key Metrics

Monthly Active Users

As of November 30, 2024, Metaplex has achieved a record high of 844,966 monthly active users, representing a year-on-year growth of 253%.

number of assets minted through the protocol

In November, the total number of minted asset types exceeded 1.44 million, setting a new historical record. Among them, 94% are fungible tokens, and 6% are NFTs. Compared to January of this year, where NFTs accounted for 18.6% and fungible tokens for 81.4%, Metaplex's main business has shifted towards fungible token asset services.

protocol revenue

In November, protocol revenue reached as high as $3.3 million, also setting a new historical record. It is worth noting that Metaplex did not provide any token subsidies, and the revenue growth was entirely organic.

Metaplex Team: The Ecological OG Close to the Solana Core Circle

Metaplex founder Stephen Hess is one of the earliest employees of Solana and has participated in the development of Solana Stake Pools, the SPL governance system, and Wormhole.

In January 2022, Metaplex secured a strategic investment of $46 million from institutions such as Multicoin, Jump, and Alameda, with a valuation of approximately $450 million.

After the FTX collapse, Hess quickly announced layoffs to prepare for the impending industry winter. The team size still remains at just over 10 people, but the product iteration and development efficiency are very high.

The Metaplex team embodies the key elements of an excellent Web3 team:

• High match of core member backgrounds
• Closely related to the core circle of the public chain ecosystem.
• Product intuition is accurate, delivery capability is strong
• Have a cost control awareness
• Receive support from top VC investments

MPLX: Token Utility and Valuation Level

Basic Token Information

• Total supply: 1 billion
• Circulation Rate: 75.6%
• Main illiquid portion: held by DAO and the foundation, as well as some unlocked shares.

token utility

• Governance Voting
• 50% of the protocol revenue will be used to repurchase ( 12,000 SOL every month )
• Future will be used as Aura node staking assets

protocol valuation

Compared to Raydium, which also benefits from the Meme craze, Metaplex has a slightly higher valuation. However, the business positioning of the two is quite different, and the comparison is for reference only.

potential driving factors and risks

Advantages:

• Asset service upstream ecological niche
• The product has a high market fit and can be profitable without token subsidies.
• Actively expand the second growth curve
• The team's quality is excellent, and it has a close relationship with the core ecological circle.
• Token buyback mechanism, relatively low market capitalization

Potential upward driving force:

• Other tracks in the Solana ecosystem are active
• Launching on a larger trading platform
• Increase service charges

Risk:

• The Solana Meme craze has faded.
• Lack of sustainable income sources

Summary

Unlike the impression of most investors, Metaplex is actually a fundamental protocol serving all types of assets in the Solana ecosystem and is a direct beneficiary of the Meme craze.

If you continue to have confidence in the Solana ecosystem, then Metaplex, which occupies the upstream ecological niche of "asset issuance and management", is worth long-term attention.